The Obama Administration is transporting Wall Street logic into higher education by proposing to measure the value of a college by the earnings of its graduates. This conceptual coup may be the best news for Wall Street since the abolition of Glass-Steagall.
We need not repeat all that has been written about how this money-making metric misses the point of college -- about how students should be studying to become good citizens and leaders, to find and know themselves, to discover which pursuits in life best suit them, to develop an inquiring mind and so on. But such musings, however admirable, miss the main point: Using future earnings as a measuring stick transforms the entire notion of higher education into yet another financial instrument. No doubt some Wall Street hustlers are already dreaming up how to create derivatives they can sell to insure students and their families against less than expected earning outcomes from the college investment. Wow, an entire new casino in the making, right up there with the ethanol market.
Should this pernicious metric really catch on, it will create even more pressure for colleges to suck up to high finance. Not only do colleges court their hedge fund graduates as if they were gods instead of crooks, but an earnings metric will encourage colleges to become feeder schools for Wall Street firms since that's where the highest salaries are. What a virtuous cycle: train the kids for Wall Street, get a higher earnings ranking, get more ambitious applicants, then get rich graduates to donate to your college. The next step is to sell the naming rights. How about the JP Morgan Chase School for the Dark Arts?
What happened to Obama, the low-paid, community organizer?
Unfortunately, the president's early career serves as a poster child for what colleges should avoid. As we all know, after graduating from Columbia University (tied for 54th in graduate earnings as recorded on PayScale.com) Obama began his working career as low paid community organizer. I assume he did this work because he wanted to serve the residents of the economically depressed areas in Chicago's south side. Luckily for Columbia's PayScale.com rating, the future president made quite a jump from community organizing to Harvard Law School, to state politics, to best-selling book author, and then to POTUS. Of course, he has not, as yet, reached the million an hour hedge fund income level, but he's probably no longer hurting Columbia's ranking. However, for those who worked with him as community organizers, and then continued with do-good work, they would be viewed as liabilities, not assets, to the rankings of their alma maters.
Solidifying the new Values of the Billionaire Bailout Society
This making-money metric illustrates how far we've drifted into a new era of financial hegemony, which I'm calling the billionaire bailout society. A generation or two ago Obama's proposal would have met with derision, and not just form obstructionist Republicans. For the WWII and baby boomer generations it was honorable to serve -- to help make your community and your country a better place. After so much war and destruction, and after so much poverty and discrimination, it was a badge of honor to join the Peace Corps or help build a cooperative or community organization to serve the disadvantaged. Even wealthy political elites like the Kennedys made it clear that they considered public service a much higher calling than just making money. You didn't have to be a radical or even a liberal to believe that public service was a good in itself. Going to college gave you special access to develop a deeper humanistic view of the word, to find your calling, and to sharpen the skills needed to help make the world a better place instead of making seven figures. How quaint!
Financial deregulation unleashes the selfish pursuit of profit
There's a long story to be told about how our nation turned from public spiritedness to the selfish pursuit of money at all costs. Of course, we shouldn't be waxing nostalgic for the good old days that weren't there, especially for minorities, women and the LBGT community. Rather our claim is more modest: From the end of WWII at least until the mid-1960s, there was a collective hope that our system could improve and that we could make it better. In fact it was our duty to do so.
But after the assassinations of the Kennedys, King and Malcom X, and after the needless, bloody Vietnam war, a good deal of that hope faded. Economist Milton Friedman, among others, seized upon the chaos and disillusionment to make the case that the pursuit of profits within a system of fair rules, led to the most bountiful economy for all. "Greed is good" is good for us all within the bounds of decency and the law.
But Wall Streeters had other ideas. They wanted to create unbalanced rules that would allow them to siphon away our nation's wealth, while claiming to enhance it. Through neo-liberal deregulation and so called "free" trade, they did just that. Financial sector incomes rose dramatically, while the incomes of the average working person stagnated and slowly declined. Even the 2008 crash, which so clearly unveiled the venality of high finance, didn't change this trajectory. The giant banks and hedge funds that took down our economy got to keep their ill-gotten gains. And after the crash, they have grown even larger and richer from the bailouts and Federal Reserve policies. Regretfully, the evidence is in: the billionaire bailout society is entrenched.
Education: A new Wall Street Profit Center
There is no compelling reason why our students must be fleeced by usurious loans to finance their higher education. The rest of the developed world uses public resources to support its students either through free tuition or through low or no-interest loans. It would cost the taxpayers absolutely nothing if the Federal Reserve provided no-interest loans to students. (After all it already provides trillions of dollars minimal interest loan support for our banksters.)
But that's not what happens in the new billionaire bailout society. The student loan market is just that -- a trillion dollar market that now has eclipsed credit card debt in size. Wall Street wants our kids locked into debt forever. Imagine Wall Street's delight in seeing the education debate shift away from predatory student loans, and instead focus on the failure of colleges to graduate more high income earners. (By the way, these earning arguments are loaded with disproven supply-side notions --- like if we only educated college kids better, more jobs would miraculously appear, even during the worst economic slump since the Great Depression.)
If the President had the courage of his convictions (at least those of his youth)
What we don't need are more college graduates headed to the financial casinos eager to gamble away our nation's wealth. You want to rank colleges based on what their graduates do? OK, why not see how many graduates actually contribute directly to the common good? If that were the case we'd be tracking the number who went into the helping professions: How many teach in disadvantaged areas? How many provide health care to underserved populations? How many build businesses and cooperatives for the unemployed? How many serve low-wage workers in their struggles for decent wages and working conditions? How many are working to protect the environment or enhance human rights here and abroad?
Sounds too complicated and contentious to compute? Here's a simpler metric. Since our billionaire bailout society places such a low premium on the helping professions, then we should simply rank colleges by graduate incomes ... in reverse order. The odds are the lower the income of its graduates, the more those graduates are contributing to society. (Hats off to Oberlin, my alma mater, for its PayScale ranking of 218. The lower it goes, the more our do-gooder class of '69 is likely to contribute.)
I wonder what Obama, the community organizer, would think of that.
Les Leopold is the director of the Labor Institute in New York. His latest book is How to Make a Million Wall Street? Dollars an Hour: Why Hedge Fund get away with Siphoning Off America's Wealth, (Wiley, 2013)